9.1 Overview of procedure
The procedure followed by Government of India for disinvestment seeks to promote administrative simplicity and speed of decision-making without compromising on transparency and fair play. The process is as follows: · Proposals for disinvestments in any PSU, based on the recommendations of the Disinvestment Commission or in accordance with the declared Disinvestment Policy of the Government, are placed for consideration of the Cabinet Committee on Disinvestment (CCD). · After CCD clears the disinvestment proposal, selection of the Advisor is done through a competitive bidding process. · After receipt of the Expression of Interest (EOI), in pursuance of Advertisement in newspapers / website, advisors are selected based on objective screening in the light of announced criteria / requirements. · Bidders are invited through advertisement in newspapers / website to submit their Expression of Interest. On receiving EOI from bidders, the advisors, after due diligence of the PSU, prepare the information memorandum in consultation with the concerned PSU. This is given to the short listed prospective bidders who have entered into a confidentiality agreement. The list of bidders is prepared after scrutiny of EOIs and those are shortlisted, who meet the prescribed qualification criteria.
· The draft share purchase agreement and the shareholder agreement are also prepared by the Advisor with the help of the legal Advisors, and the final draft is prepared after detailed consultation with the bidders, in consultation with the Inter-Ministerial Group (IMG). · The prospective bidders undertake due diligence of the PSU and hold discussions with the Advisor/ the Government/ the representatives of the PSU for any clarifications. · Concurrently, the task of valuation of the PSU is undertaken in accordance with the standard national and international practices. · Based on the feedback received from the prospective bidders, the Share Purchase Agreement (SPA) and Shareholders Agreement (SHA) are finalised by IMG. After getting them vetted by the Ministry of Law, they are approved by the Government (CCD). Thereafter, they are sent to the prospective bidders for inviting their final binding financial bids. · The material for finalising upset price is taken from the advisors after receipt of financial bids. The bids are not opened at this stage and are sealed after receipt, in presence of bidders. ‘Upset price’ determination exercise is thereafter completed by inter-ministerial ‘Evaluation Committee’ and the IMG. The sealed bids are then opened by IMG (in presence of bidders).The ‘Upset Price.’ Is then compared by the IMG. · After examination, analysis and evaluation, the recommendations of the Inter Ministerial Group (IMG) are placed before the Core Group of Secretaries on Disinvestment (CGD), whose recommendations are placed before the Cabinet Committee on Disinvestment (CCD) for a final decision regarding selection of the strategic partner, signing of the Share Purchase Agreement and Shareholders Agreement, and other related issues. · In case the disinvested PSU's shares are listed on the Stock Exchange, an open offer would be required to be made by the bidder before closing the transaction, as per SEBI guidelines: Takeover Code. · In the disinvestment process mentioned above, Ministry of Disinvestment is assisted at each stage by an IMG, headed by Secretary (Disinvestment) and comprising officers from the Ministry of Finance, Department Of Public Enterprises, the Administrative Ministry / Department controlling the PSU, Department of Company Affairs, Department of Legal Affairs, CMD / Director (Finance) of the company being disinvested, and the Advisors and the Legal Advisors. · After the transaction is completed, all papers and documents relating to it are turned over to the CAG of India; the CAG prepares an...
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